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Climate Bond Standard prototype released

08 December 2011

The Climate Bonds Initiative has released the final approved text of the prototype Climate Bond Standard, which will be a screening tool for investors and governments to support investment in the low-carbon economy

By Kari Williamson

Bonds complying with the Standard will be certified as ‘Climate Bonds’— a mark that assures their contribution to the delivery of a low-carbon economy.

In its first iteration, the released version lists wind energy investments currently eligible with an expansion to solar energy and other renewable energy investments to follow in the coming months.

Jack Ehnes, CEO of Standards Board member CalSTRS, says: “We are looking for investment-grade returns that also address climate change. The Climate Bond Standard will allow us to know that investment opportunities put before us will be the right ones to build a low-carbon economy.”

Sean Kidney, Chair of the Climate Bonds Initiative, adds: “This product allows for a new fixed income asset class to emerge and grow – one that will be focused on recognising the investments needed to deliver a low-carbon economy by 2050 and on limiting the risk of dangerous climate change.”

Addressing traceability

As well as types of investments that are eligible, the Standard will address traceability of funds and types of bonds than can be certified. Eligibility criteria for different types of investment will be released progressively over the coming year.

According to the International Energy Authority (IEA), approximately US$1 trillion a year is required to 2050 in mitigation and adaptation investments. Funds under management by global bond traders reached US$95trn in 2010 and more than US$6trn of new bonds were issued.

Some US$12 billion of bonds backed by investments related to climate change solutions have already been issued internationally according to the Climate Bonds Initiative Issuance List.

Growing this “green debt” market provides institutional investors with opportunities to switch from carbon intensive to low-carbon investments – and fuel the growth of the low-carbon economy.

The Climate Bonds Initiative:

The Climate Bonds Initiative is an investor-focused not-for-profit, promoting large-scale investment in the low-carbon economy.

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